2/28/2013 2:30 AM ET|
Remodel projects with little payback
If you're justifying home renovations thinking that you'll recover the costs when you sell, you may want to recalculate.
Homeowners who want to remodel will find both joy and sorrow in the 2013 Cost vs. Value Report, recently published by Remodeling Magazine.
The joy comes from the report's finding that remodeling projects overall could be expected to return a higher percentage of their cost at resale in 2013, reversing a six-year decline in the recovered value of such investments. Every project on the national list posted a higher return in 2012 than it did in the prior year. The sorrow is that while returns are higher than they were, they're still far short of 100%.
The complete list included 22 midrange projects, ranging from a $1,137 steel entry door replacement to a $152,470 second-story addition, and 13 upscale projects, ranging from a $2,720 garage door replacement to a $220,086 master suite addition.
In the mid-range category, the least costly project -- that steel entry door replacement -- posted the highest return at 85.6% of the cost.
Other midrange projects that returned 70% or better were an attic bedroom, basement remodel, wood deck addition, garage door replacement, minor kitchen remodel, vinyl siding replacement and vinyl window replacement. The lowest-returning mid-range project was a home office remodel, which recouped just 43.6%.
In the upscale category, the highest-returning project was a fiber-cement siding replacement, which recaptured 79.3%. Other upscale projects that returned 60% or better were a garage door replacement, foam-backed vinyl siding replacement and vinyl window replacement. The lowest-returning upscale project was the master suite addition, which recouped just 52.1%.
And in those figures also lies the sorrow. That steel entry door replacement was the only project in the midrange or upscale category that achieved at least an 80% cost recovery, nationally. The home-improvement projects returned only a 60.6% national average. That's not much of an incentive, financially speaking, for home improvements.
Replacement projects generally were a better investment than remodeling or room additions. Cost-and-value-recapture percentages varied widely on a regional basis.
Contractors agree with the positive outlook
Remodeling contractors have high expectations for 2013, according to a fourth-quarter 2012 survey by the National Association of the Remodeling Industry in Des Plaines, Ill.
The survey found remodelers reported better business conditions, more inquires, more requests for bids, more conversions of bids into jobs and a higher value of total jobs compared with the prior quarter.
Tom O'Grady, chairman of the NARI strategic planning committee and president of O'Grady Builders, a remodeling company, in Drexel Hill, Pa., said in a statement that remodelers were anticipating major growth in their businesses.
"Many (remodelers are) saying that their clients are feeling more stable in their financial future and their employment situations; therefore, they are spending more freely on remodeling needs," O'Grady said.
The 2013 Cost vs. Value Report is a snapshot of generic projects and shouldn't be applied to individual homes. Instead, homeowners should get estimates from local remodelers and discuss home values with a local real estate professional.
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As usual, these reports always assume that you hire someone to do the work for you. You save a considerable amount of money when you perform the work yourself. The cost is usually less then half. Over the course of six months, we completely gutted and rehabbed the house we bought this year for less then $20k. The house has already appraised for $30k more then we paid for it. We have lived there just short of one year.
Glad mine wasn't that much!
I just had my bathroom remodeled, new tub, toilet, fixtures and new tile on the floor and around tub, new vanity and top and it only cost me $6,000.
It comes down to WHO does the work and how much THEY charge!
Be sure to compare prices and be fair about the quality of work, you'll get what you pay for in most cases, but prices will vary.
I got a free bid for my work from S-N-S Remodeling at houstonhomeremodeling dot com and they did excellent work!
I love my new bathroom and soon they'll be starting on my kitchen.
I plan on staying in my home for the next 20 years or so, might as well make it the way I like it! Thanks to the fantastic contractor I have, the remodels are easy on me and THEY take care of all the details!
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